Displaying items by tag: Holcim
MINT cement focus: Indonesia
15 January 2014Thank you to everyone who commented on the column in last week's Global Cement Weekly (GCW132, MINTed cement industries). Amongst the more interesting thoughts was that in a large cement producing country like the US, there are regional areas of focus. So, returning to neologisms, FACT might refer to, say, Florida, Alabama, California and Texas, four southern states with the highest cement production capacities in the union. Similar regional breakdowns could be applied to countries such as China, India or Brazil.
Following last week's look at the MINT (Mexico, Indonesia, Nigeria and Turkey) economies in the context of cement we now take a quick recap on what has been happening in the 'I' of the MINT, Indonesia.
Indonesia has a population of 238m, a cement production capacity of 47Mt and a Gross Domestic Product (GDP) of US$1.29tr. Both its cement consumption per capita and GDP per capita are low by international standards suggesting that it has considerable growth potential for its cement industry as its wider economy grows.
Indonesia's biggest cement producer, the state owned Semen Indonesia (formerly Semen Gresik) has reported to local media that its unaudited net profit rose by 14% year-on-year in 2013 to US$410m. Its revenue rose by 12% to US$1.8bn. Its new 1.5Mt/yr cement plant in Tuban, East Java has been reported as being operational, bringing Semen Indonesia's cement production capacity up to 31.8Mt/yr in 2014.
The country's second biggest cement producer, Indocement, has not reported any figures for 2013 as a whole yet. However parent company HeidelbergCement did note that the Indonesian economy had slowed down as a result of falling commodity prices. Cement and clinker sales including exports rose by 0.6% in the first nine months of 2013. Around mid-2013 local media reported that Indocement was losing market share in Indonesia.
Holcim Indonesia has also not revealed its financial situation in 2013. However, like Indocement, Holcim Indonesia reported with its third quarter results that economic growth had 'temporarily' flattened in the country. Operating results had not improved on levels in 2012.
Overall domestic cement sales rose by 5.8% year-on-year to 47Mt for the first 10 months of 2013 according to data from the Indonesian Cement Association. Previous annual rises in cement production and cement consumption had started to slow in 2012.
Growth in the Indonesian cement industry is also having an effect on the larger geographical region. Australian cement producer Boral suspended clinker production at its Waurn Ponds plant in late 2012 due to cheaper imports from countries such as Indonesia. New Zealand followed suit in mid-2013 when Holcim announced plans to build cement import terminals instead of building a new cement plant at Weston.
In summary it seems likely that the cement market in Indonesia slowed down in the first half of 2013 but it still appears to be generating growth none-the-less, true to the MINT pattern. Market analysts from Kim Eng agree, pinning issues with domestic cement consumption in 2013 on capacity bottlenecks and over-crowded ports. Growth in the cement markets for the MINT countries may seem likely but in the case of Indonesia it cannot be assumed.
Holcim Lanka appoints new chairman and director
15 January 2014Sri Lanka: Holcim Lanka has appointed Nirmala GihanWickremeratne as chairman and Premila Perera as director.
Wickremeratne has a long and distinguished career at one of Sri Lanka's most respected conglomerates, the Hayleys Group, where he served as managing director / CEO of Dipped Products Group and later as chairman and chief executive of the Hayleys Group. He is credited with the establishment of Dipped Products plc and its evolution into a world leader in its field. Wickremeratne was the founder chairman of the Sri Lanka Association of Manufacturers and Exporters of Rubber Products (SLAMERP) and has been a committee member of the Ceylon Chamber of Commerce, the Chamber's representative on the National Labour Advisory Council and president of the Sri Lanka-France Business Council. Following his retirement, he served as an independent non- executive director of a premier private sector bank.
Premila Perera, formerly partner and head of tax at KPMG in Sri Lanka, is a fellow of the institute of Chartered Accountants of Sri Lanka. She has served as regional tax director of KPMG Asia Pacific in Singapore, a member of KPMG International's 'Firm of the Future' Task Force and on the faculty of the Tax Business School of KPMG International.
EU rejects German request to review Holcim-Cemex deal
07 January 2014Belgium: The European Commission said on 6 January 2014 that it has rejected Berlin's request to refer to the German competition authority regarding a proposed takeover by Holcim of some of Cemex's European assets. Holcim intends to acquire part of Cemex's activities in cement, ready-mix concrete and aggregates in western Germany and a small number of plants and sites in France and the Netherlands.
The German competition authority had asked to review the proposed deal itself, arguing that it threatened to significantly affect competition in the cement markets of northern and western Germany. However, the Commission, which acts as the competition authority in Europe, said that the deal would affect cement markets outside of Germany such as parts of Belgium, the Netherlands and the northeast of France. "The Commission concluded that the geographic scope of the affected cement markets is wider than national and that therefore the Commission cannot refer the assessment of the transaction to Germany."
The Commission announced in October 2013 that it was opening an in-depth investigation into the proposed takeover. It has until 31 March 2014 to make a final decision.
Holcim New Zealand announces terminal locations
18 December 2013New Zealand: Holcim New Zealand intends to invest US$80m towards building two cement import terminals at Primeport Timaru, South Island and Waitemata Auckland, North Island after abolishing plans for a new integrated cement plant in New Zealand earlier in 2013.
Each site will store up to 30,000t of cement and will take two to three years to build. The Timaru terminal will include a ship unloader and conveyor system leading to an enclosed storage facility on leased land. There will also be pumping equipment allowing cement to be fed back from storage on to coastal ships.
This story was amended on 19 December 2013
India: Holcim Group, which is under the process of restructuring its holdings in India, has appointed Bernard Terver as additional director on the board of ACC and Ambuja Cements with effect from 4 December 2013.
Terver graduated from Ecole Polytechnique, Paris, in 1976 and has worked in the cement industry for more than 35 years. He has been in the service of Holcim since 1994, holding senior positions including that of CEO of Holcim Colombia and Holcim US.
The board also re-appointed Kuldip Kaura as the CEO and MD for one year with effect from 1 January 2014.
Ambuja Cements and ACC integration to save US$14.4m
03 December 2013India: Following the successful vote to re-structure Holcim's India operations, Ambuja Cements and ACC, the integration of common functions across the two companies has begun.
Holcim wants to eradicate the duplication of roles across the two companies that will aid in savings of US$144m through synergies in supply chain and fixed cost optimisation. The integration will see big changes for some of the two companys' 10,000 employees. Some will be relocated to the group's upcoming facilities as the cement makers have no plans to cut spending.
"The restructuring is about deriving further value from the Indian platform," said Anantharam Gopalkrishnan, vice president for the treasury and tax at Ambuja Cements.
Holcim intends to keep the two brands, Ambuja Cement and ACC, independent. It does not plan to launch the Holcim brand in India or market the two brands with the Holcim tag. When the integration process is completed, which is currently scheduled for 2015, Holcim intends to evaluate the full merger of the operating companies into one unified entity.
Holcim India’s rejig gets Ambuja public shareholders' nod
21 November 2013India: Ambuja Cements announced on 21 November 2013 that shareholders had approved a proposal by Swiss parent firm Holcim to rejig its Indian cement units, winning 377m of the 550m votes placed (68.5%). 173m votes were placed against the merger.
The resolution for the scheme of amalgamation between Holcim India and Ambuja Cements was passed through postal ballots with the majority of public shareholders voting in favour.
Holcim had proposed in July 2013 the restructuring of its Indian operations by merging subsidiary Holcim India with Ambuja Cements and transferring Holcim India's 50.01% stake in ACC to Ambuja, making it a holding company of ACC. Holcim now has a 61.4% stake in Ambuja.
Public institutional holders, which hold 614m shares in the company, cast 534m votes. Of them, 67.9% voted in favour and 32.0% against the merger. Other public holders cast 15.4m votes. Of these, 13.6m were in favour and 1.80m were against.
As per the new regulation of the market regulator SEBI, companies require approval from the majority of the minority shareholders for mergers and acquisitions.
Holcim claims that this transaction will further improve its holding structure in India, strengthen the platform for future growth and generate synergy benefits of US$144m/yr. "These benefits, which will be realised in a phased manner over two years, will be shared by both companies equally through supply chain," said Bernard Fontana, CEO of Holcim.
Holcim CFO Thomas Aebischer argues against 1:12 pay proposal
21 November 2013Switzerland: On 24 November 2013 Swiss voters will decide whether to cap the highest wages given in a company at 12 times the lowest pay. Swiss corporations and the government have joined forces to oppose the '1:12 Initiative', which is forecast to be rejected.
"When you read the text of the proposal, it's very simple, very clever, very misleading. You would never go to the US and think: how much can I pay people now? You pay whatever you need to pay in order to attract them," said Thomas Aebischer, CEO of Holcim. "This is a disaster for this country. It's a real risk and a real danger for Switzerland remaining an attractive place to do business."
The pay scale at Holcim underscores the challenge for multinationals if they were to comply with the proposed rule. Bernard Fontana, Holcim CEO, received a base salary of Euro1.42m in 2012, 35 times the lowest-paid employee.
Executive payouts have ballooned in recent years while company profits have slumped and taxpayers bailed out Switzerland's largest bank, UBS. This has led to calls for a more equal distribution of wealth.
India bowls Holcim-Ambuja merger a googly
20 November 2013Minority shareholders have bowled a googly at Holcim's attempt to simplify its business structure in India.
Or for readers unacquainted with cricket terminology, domestic institutions which hold about 9% in Ambuja Cements have been widely reported in the Indian media as having voted against a move to merge the cement producer with its parent company, Holcim India. The final results of the shareholders vote will be publicly announced on 21 November 2013. The shareholders actions follow Holcim's recent approval by the Indian Foreign Investment Promotion Board for the merger.
That this is bad news for Holcim is not in doubt given that the multinational cement producer has taken a hit in its Asia-Pacific region, particularly in India. Overall for the region its operating profit fell by 32.5% year-on-year to US$333m for the quarter to 30 September 2013.
Specifically, Ambuja Cements managed to maintain its sales volume of cement and clinker year-on-year at 4.89Mt for the third quarter. However, its net profit after tax fell by 45.4% to US$27m. It blamed the decline on subdued demand due to overall economic slowdown combined with higher input costs. Meanwhile, ACC saw its sales revenue from cement fall slightly to US$388m for the third quarter while its profit for cement before costs and tax fell by 57% year-on-year to US$22m.
As mentioned in August 2013 when this column last looked at India, the parallels to cement industry consolidation in China are telling. In China guidelines have been issued to cut overcapacity in the cement industry, with the Ministry of Industry and Information Technology releasing lists of companies that should cut excess production. Alongside this, the country's leading cement producers have reported a return to profit so far in 2013. Who exactly is taking the loss from this production retraction in China, if it is happening, remains unreported and unclear.
In India, much more light has been shone upon an over-producing cement industry. Holcim and its subsidiaries are just some of the companies reporting falling profits at present. Ambuja's minor shareholders look like they have made a decision that is counter to the best interests of the Indian cement industry.
In a recent UK newspaper article, political theorist David Runciman compared the respective merits of democratic and more autocratic modes of government. Unsurprisingly for a British academic Runciman came out in favour of democracies, yet the advantages of more centralised governments were noted, such as the ability to make wide-reaching decisions faster and more comprehensively.
In light of this, comparing the Indian and Chinese cement industries in 2040 will be fascinating. Minor shareholder tussles will likely be forgotten but cement (and hopefully cricket) will be as vital then as they are now.
Holcim looks at foreign funds to cement US$2.32bn Ambuja deal
20 November 2013India: Domestic institutions, which together hold 9% in Ambuja Cements and have voted against the Ambuja-Holcim merger deal, have left the whole transaction on a knife-edge as Holcim is now banking on foreign funds to rescue it.
For the US$2.32bn deal to go through, Holcim needs approval from the majority of Ambuja Cements' minority shareholders.
This is the first merger and acquisition transaction to go under the hammer of minority shareholders after India's capital market regulator, Sebi, empowered them to approve or reject transactions in February 2013.
The voting process, which ran for three weeks, closed on 19 November 2013 and early indications suggest that most of the Indian minority shareholders have voted against the deal.
LIC, the biggest Indian institutional investor in Ambuja Cements, GIC and other public sector insurance companies have voted against the deal that would enable Ambuja Cements to emerge as Holcim's flagship firm in India.
The exact response of foreign institutions such as Aberdeen, JP Morgan and Oppenheimer, who together own about 30% stake in Ambuja Cements could not be ascertained.
Ambuja Cements declined to comment on the voting results, which will be officially released on 21 November 2013.